Welcome to The Discovery Trading Group

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Nov 292011

We are a group of professional and amateur traders founded by principals of a quantitative research firm which develops strategy and periodicity diverse programs and risk modeling tools. Our own internal process involves using this webspace as a collective resource for sharing both discretionary thoughts during intraday sessions and as a sort of virtual think tank for our ongoing quant research. A big part of that research has consistently shown that the ‘Holy Grail’ of the purely mechanical, single market intraday trading strategy that produces near linear returns without significant ongoing adaptation DOES NOT exist. As such we have found that for most traders pursuing single market intraday strategies, an adaptive, risk management focused discretionary approach is likely to bear the most fruit. Ironic, given that rigid, purely mechanical systems are what the vast majority of retail traders (including us at one time) seem to be in relentless pursuit of. 

In the spring of 2010 we created a private, member only forum behind the blog devoted to our ongoing discussions related to discretionary analysis of market structure, price action and order flow to like minded retail traders as a sort of experiment. Since we have always found the format in which we use this space privately to flesh out ideas to be so beneficial, we wondered if it might be even more fruitful to increase the sheer numbers of those participating in this process and with that, DTG as it exists today was born. By any measure, the experiment has been almost unfathomably successful for us in terms of it’s role in keeping us sharp in whatever discretionary or quantitative work we happen to be engaged in at the time. Sharing our experiences and interacting with the greater numbers continues to spark new ideas for all of us, making our little experiment a huge win on all fronts in our book. For information about the type of trading that is the foundation for what most members are focused on here, follow this link:

Methodology Framework

 Posted by at 11:24 am

05/27/2019 US Memorial Day

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May 272019

Today is Memorial Day and US stock markets are closed.  DTG will resume posting tomorrow, Tuesday, May 28.  Enjoy the long holiday weekend!

 Posted by at 5:20 am

05/23/2019 ES Trade Plan Worksheet

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May 232019

Hopes for short-term progress in US/China trade negotiations is fading after US Treasury Secretary Mnuchin said there are no scheduled talks, but Trump would meet Xi Jinping at June’s G-20 meeting.  Meanwhile the Japanese companies Panasonic and Toshiba, plus the UK’s ARM Holdings have joined the blacklisting of China’s Huawei Technologies.  Stock in US tech companies like Apple are declining in what’s being called the Tech Cold War is escalating.

Adding political fuel to the fire, the US sent 2 Navy destroyers into the Taiwan Strait as a commitment to a free and open Indo-Pacific.  While the US recognizes Taiwan as independent, China considers the island a sacred part of Chinese territory and will make it a part of “one China” by military force if necessary.  The Taiwan President tried to reassure everyone about the US ships that there was no cause for alarm.  A Chinese spokesperson said Taiwan is the most sensitive issue in China-US relations.

Meanwhile Tyson Foods (TSN) is looking to build a beef-processing plant in Kazakhstan to avoid Chinese tariffs.  The initial investment is $200B but it’s expected to be billions as Tyson looks to supply 5 million tons of beef to China a year.

L. Brands (LB) is up over 12% premarket after reporting their Bath & Body Works store sales increased 13%.  Earnings include BBY, BJ, HPE, HPQ, HRL, ADSK, MDT, SPLK, and DECK.  The economic calendar includes Claims @ 8:30am EST, Flash PMIs @ 9:45am EST, and New Home Sales @ 10:00am EST.

After shrinking for the last few days, volatility has ticked up over the US/China escalating tensions.  Size bias is short into the US session open on lighter than recent Globex Size volume.


 Posted by at 6:42 am

05/22/2019 ES Trade Plan Worksheet

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May 222019

It’s a Fed day with FOMC meeting minutes released at 2:00pm EST.  The White House continues their unpredictable moves to secure a US/China trade deal.  After easing Huawei Technology restrictions, the NY Times reported the White House is looking to target and blacklist additional Chinese companies.  The Commerce department may require US companies to get approval before supplying parts to world’s largest video surveillance company Hikvison Digital Technology.

Cui Tiankai, the Chinese ambassador in the US told Fox News, “It’s quite clear the US side that more than once changed its mind overnight and broke the tentative deal already reached… So we are still committed to whatever we agree to do, but it is the US side that changed its mind so often.”

Nordstorm (JWN) is down over 9% and Urban Outfitters (URBN) is down nearly 7% after both retailers missed estimates.  Home Depot (HD) reported stronger than expected earnings although the stock barely moved.  Earnings include LOW, TGT, VFC, NTAP, SNPS, LB, and ADI.

The economic calendar is light with Oil Inventories @ 10:30am EST.  Volatility is beginning to shrink as markets continue to wait on US/China trade negotiation information and summer is starting to kick in.  Volatility could dry up into the morning into the FOMC minutes release.  Size bias is short into the US session open.


 Posted by at 6:43 am